Greece Hopes To Boost Growth With A Program Right Out Of The Developing World

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ATHENS (Reuters) – Greece plans to set up “special economic zones” to attract private investment and help lift its debt-laden economy out of depression, the government said on Tuesday.The zones would offer investors tax and administrative advantages. Athens is already in talks with the European Commission to get approval for the move, Development Minister Costis Hatzidakis told a news conference.

“We believe these zones will boost the real economy by creating a special regime to attract investment and generate exports,” Hatzidakis said.

The announcement comes as Greece is struggling to breathe life into its ailing economy, now in its fifth consecutive year of recession. Special economic zones have been used by developing economies, notably China, to spur growth.

Structural reforms such as wage cuts and liberalization of closed-shop professions loom large in an European Union/International Monetary Funds bailout plan to save the country from a chaotic bankruptcy and possible exit from the euro.

But Athens has criticised the plan for being too long on austerity and too short on economic recovery measures.

Greece’s economy is expected to have shrunk by about a fifth over the 2008-2012 period, partly due to austerity policies imposed on the country to reduce its debt and deficit.

Hatzidakis urged the country’s EU partners to accept Greece’s plan to establish these zones. “There are already objections outside Greece because it (the zones) would give the country a comparative advantage,” he said.

The zones, however, would not allow investors to pay workers especially low salaries, said Hatzidakis, who is the cabinet minister in charge of economic growth policy.

“Current labour law will be fully respected,” he said. Greece has already slashed minimum wages to encourage the creation of new jobs. Unemployment, however, still hovers at record levels, hitting 23.1 per cent in May. (Reporting by Harry Papachristou)

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